El Paso City Council to vote on title-loan regulation this week

A controversial ordinance regulating payday and car title loan businesses in El Paso will be introduced by the City Council on Wednesday during a special meeting.

The ordinance would limit how much customers can borrow from a payday or car title lender and how many times they can renew their loans, and would require lenders to register their businesses with the city.

The council would vote whether to adopt the ordinance following a public hearing on Jan. 8. If approved, the ordinance would become effective in July.

Some payday lenders have vocally opposed the proposed ordinance, arguing the state already regulates their business.

Several cities across the state have adopted similar ordinances to help regulate payday lenders, saying the state has failed to protect consumers from the short-term, high-interest loans.

Payday loans are small cash advances that typically have a two-week or month-long loan term and high interest rates and fees. Borrowers can renew the loan by paying the rates and fees, but they retain the same balance. Auto title loans allow borrowers to use their car titles as collateral for a typical one-month term. If the borrow defaults, the lender seizes the car.

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The proposed ordinance would limit payday loans to 20 percent of the borrower's gross monthly income and auto title loans to either 3 percent of the borrower's gross annual income or 70 percent of the vehicle value. The ordinance would also limit the number of installments to four and rollovers and renewals to three. The proceeds from each installment or renewal would be required to reduce the loan principal by 25 percent.

Austin, Dallas and San Antonio have passed similar ordinances, some even regulating zoning for the businesses.

City Rep. Susie Byrd, who proposed the ordinance, has said the issue will likely be discussed during the upcoming legislative session that begins Jan. 8. She said she believes legislation to limit payday loans and protect consumers has a strong chance of being approved by state lawmakers, but that the city ordinances are necessary until the state steps up.

"It's almost a backup plan because although we believe we have support for this kind of regulation at the state level, we can't continue to allow this type of predatory lending to continue," Byrd said in a previous interview.

Lobbyists for the lenders are expected to fight these types of local ordinances in the upcoming legislative session, looking to get them repealed.

Also Tuesday, the City Council will consider authorizing nearly $650,000 for the remodeling of the El Paso Times building on North Campbell Street, where the city will move its administration starting in February. The purchase order in that amount would be issued to Basic IDIQ Inc., which the city recently awarded a job order contract of up to $4 million for construction and repair of city-owned buildings over two years.

The funds for the remodeling were previously approved as part of the city's relocation and ballpark plans.

The work will include demolishing the existing office configurations and building new offices, hallways and work spaces. Plumbing, electrical and heating and cooling systems work will also be done.

The city recently bought the Times' building as part of its relocation plan to make way for the Triple-A ballpark where the City Hall building now stands.

The council will also discuss litigation and petitions related to the demolition of City Hall and the construction of the ballpark in executive session.